Singapore Proposes Changes to Free Trade Zones Act to Address Illicit Trade Concerns

View of Singapore’s Skyline (Wikimedia Commons) 

Singapore’s Senior Minister of State for Finance, Chee Hong Tat, announced plans to impose additional regulations within the nation’s free-trade zones (FTZs) in Parliament on October 4. The additions come in the form of proposed amendments to Singapore’s Free Trade Zones Act, which seek both to combat illegal activities and to “further enhance the regulation and control of goods that flow through” the FTZs.  The amendments primarily center on expanding surveillance of zone activity and detailing duties of workers within FTZs, but also seek to address the penalty framework for potential non-compliance. 

FTZs are designated locations in which “companies can store goods and are exempt from duties or [tax on goods and services].” First established in 1969 as mandated by the Free Trade Zones Act 1966, they facilitate trade activity within Singapore and uphold the country’s role in international trade as a free port. Longstanding concerns from the government over possible illicit activity through money-laundering or smuggling, however, prompted the recent push for amendments to the Free Trade Zones Act. 

The amendments affect three groups: FTZ operators, cargo agents working within FTZs, and Singaporean customs officers. According to Chee, FTZ operators will now need to obtain a license, through meeting formalized requirements, in order to be officially authorized. For instance, authorities will need to screen individuals and install security structures like CCTVs. Although many of the measures have already been put in place, their formalization in legislation, Chee says, will allow for greater regulation and specification needed to enhance security within the zones. In addition, the responsibilities of cargo handlers to monitor goods and provide data will be more clearly defined. Lastly, the enforcement powers of the Director-General of Customs and other officers will be expanded to ensure compliance with these regulations and provide closer supervision of FTZ activity. Chee commented that the government hopes to begin implementing the relevant changes in early 2024. 

Members of Parliament, however, raised a number of logistical questions concerning the amendments during their session. MP Saktiandi Supaat raised concerns regarding the increasing difficulty in differentiating Singapore's FTZ operations from FTZ performance in other countries, and which measures could maintain Singapore’s position as the transshipment hub of choice for inter-Asian trade. MP Yip Hong Weng inquired about the existence of measures to ensure the accuracy of data collected within the FTZs and the appropriate review of the Director-General’s decisions under their expanded powers. Further investigation and review of the amendments may be necessary to ensure the viability and effectiveness of the regulations.